Mid Day Outlook: November 14, 2017

Scott GreenDaily Market Report

Mid-Morning Look
Tuesday, November 14, 17

U.S. stocks slump as tax reform concerns weigh, the dollar falls against most rivals, with the euro hitting multi-week highs on better data out of Europe; energy prices broadly lower after the IEA cut its global oil-demand forecasts, offsetting a more bullish outlook from OPEC released a day earlier; biotech stocks underperform with broad weakness in healthcare; Dow component GE slides further on negative analyst calls following its lower guidance and reduced guidance; despite the market reaction, major U.S. averages remain around 1% from their all-time closing best levels as optimism remains strong in stocks; also overnight, China’s industrial output expanded 6.2% YoY in October, slowing from September and below analyst expectations (weighing on material stocks). Out of Washington, The White House is considering Mohamed El-Erian of Allianz for the vice chairman’s position at the Federal Reserve, according to a Dow Jones report.; retail earnings mixed with TJX, DKS sliding on results while Dow component HD pares gains despite beat and raise quarter
Treasuries, Currencies and Commodities
·      In currency markets, major European stock indexes slipped with the regional benchmark headed for a sixth straight loss, as the euro hit its highest level in three weeks on the back of stronger-than-expected German economic growth figures. The euro climbed above $1.1700 against the dollar for the first time since Oct. 26; dollar overall weak vs. counterparts
·      Energy futures are sharply lower, after the International Energy Agency cut its global oil-demand forecasts, offsetting a more bullish outlook from OPEC released a day earlier. The EIA report cut its crude-demand outlook by 100,000 barrels a day for 2017 and 2018. However, on Monday, OPEC raised its forecast for oil demand this year and in 2018. WTI crude down over $1.30. Note both crude benchmarks hit 28-month highs early last week,
·      Treasury markets gain slightly as yields dip; however, the short-dated Treasury yields hold steady after jumping Monday on rising rate hike expectations by the FOMC in December even in the absence of stronger inflation numbers; the two-year note steady at 1.687%, its highest since Oct. 20. 2008, though the 10-yr note yield is down slightly at 2.38%
Economic Data
·      Producer Prices for October rose 0.4%, above the 0.1% estimate, while core prices (ex food and energy also jumped 0.4% vs. est. 0.2%; final demand rose 2.8% y/y vs. est. up 2.4%
·      Sentiment among small-business owners rose in October as the promise of tax reform buoyed expectations for sales and growth. The optimism tracker from the National Federation of Independent Business rose to 103.8 from 103, vs. est. of 105
·      Household debt rose by $116 billion, or 0.9%, to $12.96 trillion in the third quarter, the New York Fed said Tuesday. Credit-card debt rose by 3.1% while home equity lines of credit, or HELOC, balances fell by 0.9%. There were small gains in mortgage, student and auto debt.
·      AAP +19%; as Q3 EPS topped views and reaffirmed year outlook
·      BWLD +22%; received a takeover bid valued at more than $2.3 billion from private-equity firm Roark Capital Group of more than $150 a share in recent weekshttps://goo.gl/ZXL9gq
·      IGT +12%; as Q3 revs of $1.22B top estimates on better Ebitda guidance
·      INFO +2%; on earnings results
·      KLIC +16%; helps semis after Q4 rev beat and guidance $185M-$195M top $164M estimate
·      MAT +4%; extends yesterday gains on HAS merger reports
·      SSYS +5%; after 3Q EPS beat estimates and it raised full-year forecast.
·      BHGE -4%; down in sympathy with GE weakness
·      CF -4%; downgraded to underweight and $33 tgt at Atlantic Equities on valuation
·      DKS -7%; said 2019 EPS is expected to decline by as much as 20% from the $2.92-$3.04 adj. EPS it expects for the current year 
·      GE -6%; extends losses as analysts downgrade following lowered guidance and reduced dividend announcements yesterday
·      LOXO -9%; announced a deal to develop cancer drugs with Bayer for up to $1.55B in upfront and milestone payments, but shares slide as reduced M&A taken off the table said one analyst
·      MRTX -13%; after reshuffling its pipeline and stopping development of glesatinib
·      NFX -6%; amid weakness in nat gas and oil prices/IEA lower demand
·      RRC -5%; among top S&P decliners on lower natural gas prices
·      TJX -4%; as Q3 revs and comp sales miss estimates and year guidance below estimates



Market commentary provided by Hammerstone Markets, a division The Hammerstone Group, a firm separate from and not affiliated with Regal Securities L.P.  Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.

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